Copy Protection Does Not Mean More Sales

from the and-the-flip-side dept

We've been pointing out that this isn't true for years now, but the entertainment industry is still so focused on "stopping piracy" rather than "what's the best business model," that they still don't seem to realize that many of their efforts to "stop piracy" actually do nothing to help their bottom line, and often do plenty to hurt their performance. We've already shown (with multiple studies) that people who download unauthorized copies often tend to be the best customers, but there's also the flip side of that equation, which is whether or not preventing unauthorized file sharing increases sales. We've suggested for years that even if the industry could slow down unauthorized copying, it's unlikely that it would directly lead to an increase in sales.

David Pogue has an article in Scientific American saying the same thing, highlighting how his own attempt at copy protecting some ebooks didn't lead to more sales, but that freeing up his ebooks actually did increase sales:

I make most of my income writing computer books. To my great distress, I discovered that they are widely available online as PDF files. But when I griped on my blog, my readers challenged the assumption that I was losing sales.

“First of all,” they said, “you’re counting a lot of people who never would have bought the book in the first place. Those don’t represent lost sales. And you’re not counting the people who like the PDF so much, they go buy the print edition or discover from the PDF sample that they like your writing.” One reader challenged me to a test: make one book available both on paper and as an unprotected PDF file. Report the effect of sales after one year.

I did that. The results were clear: Piracy was rampant. The book was everywhere online. But weirdly, my readers were also proved right. Sales of the printed edition did not suffer; in fact, they rose slightly year over year.

Now, there are two things worth pointing out. This particular story isn't entirely new. We wrote a similar story a year and a half ago when Pogue wrote nearly the same story for the NY Times. Also we tend to disagree with a straight "give it away and pray" sort of setup that Pogue went with here. However, that doesn't mean the point doesn't stand.

No matter what you think, morally or legally, about file sharing, if there are ways to embrace what your fans/consumers want in this manner and then make more money at the same time, does it really matter that you dislike the infringement? To put it another way: would you prefer making more with infringement, or less without infringement? Too many people assume that by cutting out infringement that leads to them making more, but there's more and more evidence that says that's simply not true.

Reader Comments

Reminds me of game publisher Ubisoft recently claming that their infamously restrictive DRM is a success because it led to a "reduction in piracy," but nowhere did they even address what it did to legitimate sales.

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Erm, no. That just gives them the excuse to continue putting on more and more draconian DRM. My pirated copy will not say to them "you made a paying customer's life more difficult", it will say "we could have sold double the copies if only the pirate version wasn't available!".

The way to stop this crap isn't just to stop buying it. You have to stop pirating it as well.

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Blizzard is in that weird "big business adolesence" period.

You know the one - where they're still trying to sort out life, the universe and everything, during that awkward middle period where they go from pro-consumer, small time "for the love of the game" to that final destination that is the anti-consumer profit grab behemoth that ultimately comes about when a company becomes too large for its own good.

Part of it is the pure unmitigated success that WoW was, the other part is that Blizzard's founders kept making the dumb decisions to continually sell out their ownership in the company to parent companies(Vivendi, Activision) that care nothing for the consumer short of the contents of their wallet.

I don't see any reason for Blizzard ever getting involved with Activision; By that point they didn't even need to advertise, people just psychically knew when Blizzard was at the precipice of a new product, like each cell in their brains were touched by the fingers of the god-emperor of man.

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Wait...what? I played Diablo II, great game, but now they won't allow mods for III?
So basically, the widespread modder community that made the Diablo and Starcraft games the legends they are today...are going to get a kick in the teeth because they're assumed to be thieves? "Someone won't put in the effort to level up two characters"...Oh for fuck sake, these are the same kinds of people who have a dozen WoW characters and spend their spare time recreating Middle-Earth in Minecraft (for no discernible gain, simply because they can). And again with the online only for single player game...NO-ONE. HAS. PERFECT. INTERNET.

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Another case in point - Just the other week, I bought Half Life 1 on Steam. Yeah, the first game, simply so that I could mod it. I could have pirated it, but the price was low and the value was there. Guess I won't be doing the same for Diablo III: I'd be paying full price and not getting the same freedoms I had for II.

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NO-ONE. HAS. PERFECT. INTERNET.

Indeed. I just got upgraded Saturday to 30MB - and it's great, but the router they brought is junk and needs replaced. The DNS keeps 'failing' on it. I know it's this, because I can connect by IP without fail. BUT I can't change 'steam' or anything to deal with this issue.

And sure, give me the bullshit of 'you can wait' - but I spent ALL DAY Saturday working on the house and cleaning - while I waited on my internet upgrade, etc, etc.

Saturday night comes and I can't play anything on Steam, same Sunday - so what was it worth to me when I had time to play it? ZERO. My gaming time is very limited, when I want to play and can't - I get quite annoyed.

So yes indeed... I'll pay for a single MMO now and find other hobbies. No more Steam style authentication. And no more 'EA style' BS either. I really didn't feel up to fully installing the 5-6 SIMS 3 DVD's I had because of some stupid error - and I know that's JUST what I'll have to do.

In both cases - sorry, but I'm no longer a PAYING customer. Your product has failed me, regardless of what you say - it has.

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Exactly.

They offer a product covered in razor blades and spikes, that is dependent not only on their services to be operational, but for your internet access to meet their softwares arbitrary demands for connection stability.

And they wonder why people get the plush version on the pirate bay? Nevermind that it's "free"(*) - it does not stab me in the face when I try to use it.

What the hell is wrong with their brains!?

(*) Risk of malware or buggy versions, the "work" needed to use cracks, keygens, cd emulators and similar instead of just clicking "install" on Steam.

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I'm not so sure I agree with you on this issue. Steam is not perfect. But it does have more benefits than it does problems.

IMO Other than giving up the secondary market (No resale of used games), and the occasional Steam glitch, I find the benefits of managing an enormous game collection, keeping it up to date, and having access anywhere I am and on any computer I'm using far outweighs the minor annoyances.

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Reduction in Piracy?

Nor did they address how much of that so-called "reduction in piracy" was due to the fact that they were being boycotted by pirates -- a figure which I would guess would account for the majority of that drop.

DRM only affects how soon after release the pirating will begin (which will be after a crack is available), not how much something will be pirated. That is controlled by the pirates' desire for a product.

Pirates will pirate what they want to pirate, regardless of whether or not the original product is DRM "protected."

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Of course its a success. All the people who connect to their servers paid for the game. That's where they get their proof from that its a success.
However...they didn't look at the amount of people who don't connect to their servers, who can enjoy playing the game without it dying unexpectedly.

Case in point - I bought AC II for PC, never once did the DRM throw me back to the main menu, but that was because I was uing FIOS internet, which only blipped on me all of four or five times in the five months I had it. Now that I'm using shitty DSL (new apartment), I dare not risk it. It tends to die on me several times a day. There are occassions where it quits several times an hour.
Thanks Ubisoft. I actually paid for your game and now I can't play it.

Re: Just Because Freetards Make More Money ...

And yet Mike never made the claim that the same thing will benefit everyone. In fact, if my memory serves, he actually has said REPEATEDLY that he understands that these business models will not work for everyone.

But on the other side of the coin, the 'stop all piracy & license/restrict/DRM/pay wall' method... or the 'those who take copyright more seriously' mentality won't work for everyone either.

So, what's your point? Exactly what does he need to prove? The thing he's already agreed with you on?

ps... nice lead-in with 'freetard'... let's us know what to expect in retort.

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Re: Just Because Freetards Make More Money ...

Look at the story of Lord of the Rings Online going free-to-play with microtransactions. Turbine's profits tripled on that model because they gave something away for free (the main gameplay) and gave their customers a reason to buy (added value).

I was in the beta for the free-to-play and enjoyed the game more than World of Warcraft. Having to pay for a monthly subscription for an MMO makes you feel like you have to play as much as possible to get your money's worth or not play at all if you don't have time to sink into it. Free-to-play led to guilt-free playing.

Evidence

The evidence is there. Over the last couple of years, I've noticed a big "support the developers, if you like it, buy it" push among software Pirates. They are not stupid, they know that if no one pays for the software, then the well dries up. Most of the "Game" Pirates are treating the rip's as extended demo's. Sure their are those that won't pay for it no matter what, but who cares? Those guys would never buy it in the first place, you let those guys be outcast by the "Pirate Culture" .....leaching in the eyes of a true pirate is as bad as "Stealing" is to a game company, let the "Pirate culture" work for you rather than against you.

If you want to attack Piracy ....start getting rid of some of the reasons people pirate in the first place... less draconian DRM, and a full copy demo that allows you to play for x amount of time before you have to buy it. Most of the fears of gamers are centered around buying a title for 60 hard earned dollars, and not liking the game, remove the fear, remove the demand for the Pirate.

Demo's are fine, but they are a lot like movie previews, they stuff in as much of the good stuff to sell the title, but you really don't know what your getting until you get submersed into the game. So in review; A full working copy with a time limit, and limited DRM. Between these two things, you have removed the demand for a good percentage of the "Casual Gaming Pirates".

Re: Evidence

Simply don't buy

I simply don't buy anything that has any copy protection or use restriction (both content and platform to run it on). Why would I risk buying something that may not work when I want it to work or waste my time trying to figure out how to get things working?

DRM devalues content.

Any product that can be "pirated" is ultimately more useful to the end user. This can be due to the fact that the work is not limited to a particular platform or subject to "DRM expiration" or simply due to the users doing creative things that publishers never thought of.

Lack of DRM makes the product more valuable to those that are paying for it.

It allows 3rd parties free reign to make those works more useful to the buyer.

Plan for Success

Ubisoft
1) Announce multi-platform AAA game
2) Delay the PC launch
3) Don't add in any value to the PC version to compensate customers for the delay
4) Add in truly excessive DRM - force the game to quit on players in the middle of gameplay if their internet so much as sneezes.
5) Hear all about the backlash from customers.
6) Ignore what the customers are saying (truly, the entertainment industry has never heard the saying "the customer is always right")
7) Completely ignore reality and announce your plan a success.

Re: Plan for Success

2) Allow games to be modded, don't sue
3) Wait as games eventually become cult successes, as well as financial successes.
4) Announce the third game in the series
5) Say it'll be completely closed and online only, something that the previous game wasn't. Say that the modders who bought your games over the years are now thieves, and must have a shitty product and have someone watching over their shoulders at all time.
6) Say your customers won't actually play the game enough to level up two characters (way to completely fuck up profiling your customers)
7) When no-one wants to buy the game, blame the very people you alienated and call for more restrictions.

I'm not sure this is "give it away and pray" Mike. He gives away a demo version (pdf) and then sells a premium version. (paper) It's a very simple setup, but it's not necessarily a bad model generally.

"Also we tend to disagree with a straight 'give it away and pray' sort of setup that Pogue went with here."

Of course. Remember PBS? And what a big flop that was? Well, they were warned. No-one can run a TV network on just donations. There are not enough people in the country stupid enough to give away that kind of money. But the FCC went ahead and granted them a license. A total disaster. But not only did the investors lose their shirts, such a mistake has set back the quality of TV programming, especially high-quality education programming for years. You would think people learned their lesson. ;)

One of them is 'The Sims 3' - I'm so SICK of installing all the BS anytime something gets screwed up, because of their fail DRM.

Another is anything on Steam - ANYTHING. It's a good concept, but I'm tired of server problems and it's reliance on the internet. I just got an upgrade from my ISP and am having some issues. Tech is coming back out, but in the interim, I can't play ANYTHING I paid for on Steam because it's not in "offline mode", so screw Steam. You can't always predict when you'll need to change that.

I'm frankly getting sick of DRM and it's associated control concepts. I don't need to play games that bad. It's annoying. I'll stick to my one MMO.

I think I'll take the money I would spend on games over this whole next year and have my piano tuned instead. At least it won't fail to function because of DRM.

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Try this, I think the only time this won't work is if you get cut off in the middle of updating a game.

Start Steam, go into the settings, and on the Account tab, make sure there is no check mark next to "don't save account credentials on this computer". Then click "OK".

Then go back into the settings and on the Account tab, click "Login as a different user". When prompted, click "logout". You will see the login dialogue box come up. Type in your username and password. Make sure there is a check box next to the part that says "Remember my password".

Click "Login". Wait for it to log you in, then quit Steam completely by going to to the "Steam" menu and clicking "exit".

Now disconnect from your internet.

Start Steam. You should now be able to use the offline mode option any time you want now.

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Yes, I used offline mode to play Steam games on my laptop when traveling outside a wifi connection. :)

Steam is actually very useful. It keeps all my games patched, I can play wherever I want and many games I can even use the "cloud" to save my games. So if I am on my laptop (connected to the Internet for this of course) and I progress in a game and save it, I can pick up where I left off when I get back to my PC.

Also, when getting a new computer, reinstalling games is NO effort at all. :) All this and NO monthly service fee. Not to mention great deals. I bought Civ 5 recently for $17 from Steam instead of $50 at the retail store.

All this for "sales increased slightly year over year"? Wow. That could be anything, including his exposure in the magazine.

I should also point out that he is in the computer book business. Most of the computer people I know prefer a printed book to an online version when it comes to doing anything other than a quick fix on something. If they want to learn a new language or system, they buy a book, they don't tend to do it online.

Perhaps the story more is about how PDF style ebooks are just not as user friendly as paper. I think that is much more of a story than a slight year to year sales increase in a narrow field.

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Not really. You see, digital readers have things like "search" and "links" where you can find and jump to what you want in seconds, rather than wasting time thumbing through pages. Seriously, try leaping through cross-references in a 1000+ page tech manual, then try a properly formatted digital copy with linked references. It'll easily cut about an hour out of your workday, and save your fingers as well. The last paper manual I actually had to use was for my PC's mainboard. Now, of course, I have a netbook with the manual in PDF. (To be honest, I used to snub netbooks and tablets.)

Didn't we learn from failed copy protection in the 1980's?

In the 1980's software started to be copy protected to prevent piracy.

This was when software came on floppy disks.

You couldn't copy a copy protected disk (well, you could copy it, but it would detect that it wasn't running with the original disk). Since you couldn't make a copy, you couldn't make a backup (which is a copy). Thus your investment in that software, which might be a lot of dollars, was on a floppy disk -- and floppy disks have a limited lifetime and sometimes went bad for no apparent reason.

This situation was intolerable. So a market for software that could copy those copy protected disks developed. Such software was openly and legitimately sold for the purpose of making backup disks. (Today they would be declared terrorists or worse.)

Meanwhile, the legitimate user was caught in the middle. They had to buy the software they needed, then they had to buy the anti-copy-protection software in order to make backups to protect themselves.

The only people that copy protection actually hurt was legitimate users. Pirates didn't care. They could break the copy protection using, ironically, pirated anti-copy-protection software. :-)

In just a few years, copy protection largely disappeared.

Then CDROM came along. Some software again had copy protection to detect the original CD. Arms race. Lather, rinse, repeat.

DVD's, then Studio-321, Handbrake, and a multitude of others. Lather, rinse, repeat.

Re: Didn't we learn from failed copy protection in the 1980's?

Piracy has to do with pillaging ships at sea. It has nothing to do with software. This language hijacking needs to end. Now. Sharing or infringement, those are the more accurate terms. Pick your preference and stick with it. Anything else is wrong.

Give away to sell

They've been giving away content for years. Not all content, but quite a lot.

Apparently one of the effects has been that authors have seen sales for their backlists increase when, traditionally, sales fall to a minimum and stay there. (Including a backlist that was printed by a different publisher.)

The last few Baen hardbacks I've picked up (by one of the authors that publishes in the Free Library) included a CD with the book in DRM-free formats, and permission to do pretty much whatever the heck you want with it. And yet David Weber appears to still be selling books...

Even the e-books they sell are DRM-free, and in a number of popular formats.